Gunnar Beck: Beware of Germany’s proposal for a new EU-UK transnational court

In an interview with Germany’s leading daily Die Welt on 18 June 2017, German foreign minister Sigmar Gabriel appeared to signal the EU might be willing to relax some of its more extravagant demands in the Brexit negotiations. So far the EU Commission has insisted that in return for future British access to the single market the United Kingdom would have to accept both free movement of persons and the continued jurisdiction by the Court of Justice of the EU (CJEU) in all matters concerning EU citizens’ rights and, should a free trade deal be reached, presumably all trade-related disputes. Mr Gabriel told Die Welt that instead of extra-territorial CJEU jurisdiction over Britain, the EU might accept “a joint court that is staffed by Europeans and Britons which in principle follows the decisions of the European Court of Justice”.

The Commission’s demand for continued CJEU jurisdiction is extravagant and contrary both to accepted international practice regarding the settlement of disputes under international treaties and the EU’s own practice. Sovereign states do not generally submit in an international treaty to adjudication by the courts of the other party to the treaty. And in none of the EU’s fifty-plus trade, association and economic co-operation agreements with other states does the non-EU party – not even the tiny states of Andorra or San Marino – submit to the jurisdiction of the CJEU.

If the German government is now seriously urging the EU Commission to moderate at least some of its inflated negotiation demands, this is an extremely welcome development which could help to overcome a key hurdle in the unfolding Brexit negotiations. Mr Gabriel comes close to accepting in principle that any future legal relationship between the EU and the UK must involve an impartial dispute settlements mechanism based on the principle of equality between the parties. However, the German proposals – undeveloped as they understandably are – still fall far short of creating a genuine independent and impartial dispute settlements system. Mr Gabriel’s suggestions raise several obvious problems.

Words must mean what they say

The establishment of a new court jointly – and presumably equally – composed of European and UK judges meets one necessary impartiality requirement: namely, that the composition of the court be balanced between the parties. A formally balanced court, however, is not sufficient. Mr Gabriel proposes that the new EU-UK court should ‘in principle … follow the decisions of the European Court of Justice.’ This idea seems modelled on the so-called EFTA Court to which Norway, Iceland and Liechtenstein, the three non-EU members of the EU-dominated European Economic Area (EEA), had to sign up to gain full access to the single market. The EFTA Court extends and enforces written EU law and the case law of the CJEU to the three non-EU members of the EEA, although its non-EU members do not participate in EU law-making or in the decision-making of the CJEU. This is precisely the reason why Switzerland did not join the EEA. Instead, Switzerland has its own bilateral trade relationship with the EU and refused to accept the jurisdiction of either the EFTA Court or the CJEU.

Together with the EU Treaties, the EEA agreement is perhaps the only other recent international treaty which effectively assigns the settlement of inter-party legal disputes to a court which is (at best) only formally independent and effectively a domestic court of one of the parties, and authorised only to apply the law of the EU as interpreted by the CJEU. If, as the German proposal suggests, the EU-UK court were required to follow past and future CJEU case law, it would be committed (implicitly) to apply the CJEU’s teleological and strongly integrationist interpretative approach. As explained in a previous JudicialPowerProject publication, the CJEU does not follow a conventional judicial approach. It chooses between a variety of interpretative criteria and, in cases involving the basic fundamental political and economic interests of the European Union, commonly adopts a staunchly pro-EU approach even if the results are difficult to square with the wording of the EU Treaties or EU single market legislation. On the German model, the EU-UK court would simply extend such decisions to free movement and trade issues affecting the UK. This is unacceptable. The EFTA Court – though formally separate from the CJEU and staffed only with judges from the non-EU EEA states – is not in substance an independent and impartial tribunal, and over the twenty years or so since its inception, it has not taken a single decision which significantly departed from the jurisprudence of the CJEU. An EU-UK court along the lines of the German proposal would essentially be an EFTA Court MarkII.

To be properly impartial and independent, the EU-UK court would not only have to be formally balanced between the parties, it would also have to be independent of the legal systems of either party, including the interpretative traditions, preferences and proclivities of their judiciaries. Instead of tying the proposed court to the legal and interpretative approach of one party only, as proposed by Mr Gabriel, the better, i.e. more impartial, view must surely be that this court should be bound to apply an interpretative method on which both parties are agreed or can agree. There are at least two alternatives which are more impartial, and therefore patently preferable and more appropriate.

The first of these are the rules adopted by the World Trade Organisation (WTO) of which the EU, the UK and all other individual EU member states are members. Article 3.2 of the WTO Dispute Settlement Understanding (DSU) requires WTO panels and the Appellate Body to “clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law”. Article 17.6(ii) of the Anti-Dumping Agreement restates the language of Article 3.2 DSU and provides additional guidance to the effect that in applying those rules the panels and Appellate Body are to give clear priority to the wording of the WTO texts and their ordinary meaning. As the parties to international agreements should be able to rely on the accord they reached, and since there is no better guide to the meaning of that accord than its actual text and ordinary meaning, the WTO’s interpretative approach is clearly to be preferred to the more malleable and manipulable non-literal approach favoured by the CJEU.

The second preferable alternative can be found in the Vienna Convention on the Laws of Treaties (“VCLT”). Articles 31 and 32 VCLT, broadly speaking, codify the customary rules of interpretation of public international law. Article 31 emphasises the primary importance of ‘good faith’ and ‘ordinary meaning’ in treaty interpretation, whilst Article 32 states that international tribunals may have recourse to ‘supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion’, but only if the meaning of the provision in issue is genuinely ‘ambiguous or obscure’ or ‘manifestly absurd or unreasonable.’

A quasi-EFTA court of the type proposed by the German foreign minister would mean the UK continuing to accept the jurisdiction of the CJEU, albeit indirectly. The judges of the EU-UK court would not be independent in the sense that they would not be able to apply impartial, text-based rules of interpretation which are accepted by almost all governments world-wide. They would be little more than functionaries asked to apply the final decisions of the CJEU to the specific facts of the case. This is the legitimate task of lower courts all over the world which are asked to apply decisions by higher courts. However, such an ‘agency’ role is not appropriate for a transnational tribunal asked to settle disputes between sovereign states. Such tribunals must follow the impartial, text-based methods of interpretation. The approaches taken by the WTO and by Articles 31 and 32 VCLT provide two widely accepted examples of such a judicial method. Anything else, whether direct jurisdiction by the CJEU or indirect ‘transplantation’ of CJEU case law through something similar to the EFTA Court would not give the UK the confidence it needs that the exit and trade deals it may agree with the EU would be interpreted in good faith and in accordance with the obvious or ordinary meaning of its provisions.

The need to exclude post-Brexit case law

Although the German proposal does not specifically say so, it appears to imply that the proposed EU-UK court would not only apply pre-Brexit CJEU case law to free movement and trade cases involving the UK. Any EU-UK withdrawal and trade deal that may emerge, should set out in detail the pre-Brexit rights of EU and UK citizens, together with any pre-Brexit EU legislation which may continue to apply to the UK as well as the rules and principles governing trade relations between the UK and the EU. It is up to the parties to draft these rules clearly, precisely and as appropriate to both the UK and the EU. The agreement can and should be interpreted in good faith in accordance with its ordinary meaning. In the interests of legal certainty, the UK Government may decide that pre-Brexit decisions of the CJEU, which provide an authoritative interpretation of any EU legislation incorporated into the withdrawal agreement, should be treated as such by the EU-UK court. However, what the Government must not accept under any circumstances is a court that would be bound to “transpose” future post-Brexit CJEU case law to the UK on an ongoing or “rolling” basis as this would commit the UK to developments over which it has no influence.

A permanent or ad hoc tribunal?

Trade and free movement agreements do not necessarily have to involve a transnational dispute settlement mechanism. However, such a mechanism is usually adopted because it is usually acceptable to the parties, if it is balanced between the parties as well as impartial and independent of the legal systems of both or all parties. Assuming the EU and the UK Government will eventually agree on such a court along those lines, one question which arises is whether the court should be permanent or an ad hoc tribunal similar to an arbitration tribunal constituted on an ad hoc basis, members of which are drawn from a panel of eligible and qualified European and British persons. Permanent tribunals readily develop strong institutional interests and sometimes a pronounced institutional ethos – the best example of this is the CJEU, which has had from its earliest days a strongly integrationist esprit de corps. It may be that a permanent court may become unavoidable. However, in principle the Government should try to keep the arrangement as flexible as possible, with a panel-based ad hoc approach to be favoured if at all possible. For institutions will grow and grow in strength and in directions that cannot be foreseen or were not intended by some of its founders. The EU itself is poignant warning to this effect.

Finally, if the new court is to be balanced, then a mechanism must be agreed to determine how to overcome potential split decisions. There are many acceptable solutions – alternate casting votes, alternate presidencies, casting vote by draw, etc. – which may be examined at the appropriate stage.

Conclusion

Sigmar Gabriel’s proposal for a transnational EU-UK court at the heart of a future trade and mutual citizens’ rights agreement between the EU and the UK is a promising starting point for the Brexit negotiations. However, it is only a starting point. A quasi-independent court of the type proposed may do for Germany, whose political leadership, for historical reasons, often seems psychologically compelled to think and act as if those in high EU places can do no wrong. The UK, however, needs assurance that its future legal relationship with the EU is governed by the greatest possible legal certainty and overseen by a court which ensures that words mean what they say and not simply whatever it may be that best suits the European Union.

Dr Gunnar Beck is a barrister at 1 Essex Court (Chambers of The Rt Hon Sir Tony Baldry) and Reader in EU law at SOAS University of London. He is a Visiting Scholar at Policy Exchange’s Judicial Power Project.